Two fascist spies were awarded fake Nazi medals after the end of the second world war by an MI5 officer who penetrated their secret network, a newly published book on wartime espionage has revealed.

Copies of German bronze honours for non-combat gallantry were commissioned from the Royal Mint and presented at a covert ceremony in January 1946 to both British citizens by Eric Roberts, a former bank clerk who spent years impersonating a Gestapo officer.

The extraordinary counter-intelligence deception conducted by MI5 is revealed in Agent Jack by the journalist Robert Hutton which details Robert’s outwardly unassuming life.

A father of three who lived in Epsom, Surrey, Roberts had been recruited by MI5 in the 1930s to infiltrate the British Union of Fascists.

Eric Roberts set up a network of 500 sympathisers. He duped them into believing their intelligence would be sent to Berlin. Photograph: Handout

During the war, Roberts, masquerading as ‘Jack King’, established a network of 500 Nazi sympathisers including an inner group who supplied him with intelligence in the belief it was being sent to Berlin.

The operation was masterminded by Victor Rothschild, the scientist and heir to the banking fortune who was head of MI5’s anti-sabotage unit.

Two of the most active fascist informants were Marita Perigoe and Hans Kohout. Separated from her husband, Bernard, who had been interned for most of the war, Perigoe had been responsible for helping Roberts build the network and had also stolen design secrets from Rolls-Royce, makers of the Merlin engine that powered the Spitfire.

Kohout had been born in Austria but moved to Britain, taking citizenship in 1936. An expert in aluminium foil manufacture, he passed Roberts secrets including details of the Mosquito plane, early British night vision technology and Window – the chaff technology used to fool German radar.

He even told Roberts there was an important government base at Bletchley Park – home to Britain’s codebreaking efforts. When senior MI5 officers heard, they told Roberts that on no account was Kohout to go near the place. “Kohout was arguably Germany’s most effective spy in Britain during the war,” Hutton writes. “His tragedy is that none of his reports went further than MI5 headquarters.”

Hans Kohout was a skilled spy who unearthed secrets about the Mosquito plane and night-vision technology but Berlin was none the wiser. Photograph: Handout

At the end of the war, MI5 decided not to prosecute any of the ‘Fifth Column’ – partly because it did not want the Home Office to discover what it had been doing. According to Hutton, the operation was so controversial that details were kept out of reports sent to Winston Churchill.

To keep Kohout and Perigoe sweet after the end of the conflict and maintain contacts inside the fascist movement, MI5 decided to present them with medals.

Rothschild instructed his assistant to obtain ‘Kriegsverdienstkreuz second class’ German medals and asked the Royal Mint, which the Rothschild family owned, if they could make copies.

After receiving the medals, Perigoe and Kohout were, an MI5 note records, “extremely gratified”. Perigoe announced she would keep hers in the stuffing of her armchair.

Ernest Kohout with the Nazi medal, faked by a Jewish bank, which he discovered after the death of his father Hans. Photograph: Handout

“There were quite a few of these medals around at the end of the war,” said Hutton. “So it’s quite possible they were given genuine ones. But the records do suggest that having spent the war as fake German spies, Perigoe and Kohout finished it receiving Nazi medals that were forged by the world’s most famous Jewish bank.”

Hutton visited Kohout’s son Earnest in 2017. He had found the medal among his father’s possessions after his death. “When he asked his mother about it,” Hutton said, “she told him it had been given to his grandfather for long service on the Austrian railway. So he hung it on his toilet wall.”

Agent Jack: The True Story of MI5’s Secret Nazi Hunter. Published on Monday by Weidenfeld & Nicolson.